This week’s Pre-Budget Report (PBR) has received a mixed response. Some called it electioneering. On last night's Question Time, for instance, former Liberal Democrat leader Paddy Ashdown described the one-off tax on bankers’ bonuses worth more than £25,000 “a piece of gesture politics that will never work”. Suggesting that banks will be able to sidestep the levy fairly easily, he added that it was “more riddled with holes that a cheese grater”.
Meanwhile, John Wright, national chairman of business lobby group the Federation of Small Businesses (FSB), expressed relief at the extension of initiatives such as the Enterprise Finance Guarantee (EFG) and Time to Pay schemes, and the deferral of the planned 1p hike in the small firms' corporate tax rate, from 21% to 22%, to April 2011. However, he noted that this reprieve would be offset by a further 0.5% increase in national insurance from April 2011.
"While unemployment continues to rise, it is unaccountable that the government hasn’t considered a new approach, such as a national insurance rebate for new jobs in small firms," he said. "This pre-Budget report should have encouraged and rewarded job creation in 2010, rather than imposed this tax."
But what did entrepreneurs themselves have to say? We canvassed their views to find out what Darling's latest PBR really means to the UK's wealth creators.
On increasing national insurance (NI) rates by a further 0.5% from April 2011
Matt McNeill, founder of eTickets.to and Signup.to: “I was disappointed with yet another increase in national insurance but apart from that there’s not a huge amount to write home about.”
David Soskin, vice chairman, mySupermarket.co.uk: “The repulsive NI tax is again as anti-enterprise as you can imagine. This has now become the favoured tool of the socialist government as it is a wonderful double whammy: hitting businesses and employees; and by calling it 'national insurance' it is dressed up as something socially useful rather than just another tax. Increasing it at this stage in the economic cycle is plain nuts. It is a tax on jobs. We need to get people back to work.”
Charlie Mullins, founder, Pimlico Plumbers: “This has got to have been the worst budget for businesses and for workers I have ever seen. Ramping up national insurance is no way to get us out of trouble. Small businesses, the backbone of the economy, have been attacked at the very time when they need help. These are the people who are going to get us out of trouble, and penalising them is plain stupidity in my book.”
On extending the Enterprise Finance Guarantee (EFG) and Time to Pay schemes
Simon Ball, CEO of Coverzones: “Darling’s Pre-Budget Report again contained a disappointing lack of measures to really help and encourage small businesses. While the extension of the EFG and the delay in corporation tax increase are to be welcomed, the fact of the matter is that this government has spent billions backing a handful of banks and done nothing of substance for entrepreneurs and t SME community.”
Dominic Monkhouse, UK MD, PEER 1: “Simply put, very little of the Pre-Budget Report will impact on small businesses. There are some stand-outs however, mainly the ability to defer tax payment which will be music to the ears of the country’s entrepreneurs and SMBs.
“With the economy in the state it is, small businesses have massively reduced access to cash so being able to defer tax payment gives them some breathing space – letting them juggle their cashflow. It’s no doubt stopped a lot of businesses going under already and it’ll continue to have a big impact. Any initiative to help small businesses survive the recession is great news.”
On the 10p corporate tax rate on profits derived from patents
Matt McNeill – eTickets.to and Signup.to: “It’s interesting to see the government lowering corporation tax on patents but I can’t really see that doing a huge amount for many people. The same goes for the extension to the EFG and Time to Pay schemes – they’ll certainly benefit some businesses but won’t really do anything for me.”
Laura Tenison, founder and managing director, JoJo Maman Bébé: “One of the policies which I will be looking into more carefully is the 10% corporation tax on profits achieved off UK patented products. For an innovative company like JoJo this could make the high cost of patenting some of our designs more worthwhile.”
Stephen Bentley, CEO, Granby Marketing Services: “As a response and fulfilment business, potentially the most interesting part of these announcements is capital put aside for innovation and technology. We invest heavily in R&D so funding in this area is always welcome, and should encourage more green shoots.”
On returning the VAT rate to 17.5% on January 1 2010 and deferring the 1% increase in small firms' corporate tax rate
Laura Tenison – JoJo Maman Bébé: “Naturally as a retailer I am pleased that there are no nasty surprises such as an increase over 17.5% VAT or VAT on children’s wear and that the rise in corporation tax will be staved off.”
Karen Darby, founder, Call Britannia: “This increase is NI has caught us a bit by surprise but that’s not a negative. What they give with one hand they take away with the other and they’ve scrapped the CT rise so that’s good. I’m not complaining. Things like VAT going back up don’t really have an impact on us.”
On guaranteeing work or training for under-24s who are out of work for more than six months
Karen Darby – Call Britannia: “From a specific point of view it’s actually quite good news for us because the government is guaranteeing employment for under 24s and as a call centre business recruiting people in that age range we would hope that we would get support for that.”